Second Circuit Rejects "Freelance" Settlement

By Andrew Albanese
|

Aug 18, 2011

A two-judge panel of the Second Circuit Court of Appeals yesterday rejected an $18 million settlement in the long-running class action suit filed by freelance writers following the landmark Tasini case, and in the process have likely killed the chances of a revised Google settlement. In a 2-1 ruling, the second circuit yesterday held that the district court which approved a settlement between freelance writers and publishers in the class action case known shorthand as Freelance "abused its discretion in certifying the class and approving the Settlement, because the named plaintiffs failed to adequately represent the interests of all class members." New York Law School’s James Grimmelmann didn’t mince words. "The Google Books settlement—any settlement—is now dead," he noted. "There is no square one: this case is going back to litigation."

That’s because the Second Circuit in Freelance has now essentially ruled that big, general author classes are too broad to be certified, and cobbling together a suitable slate of subclasses in the Google case would be an arduous task. "Creating subclasses that track these different groups, then supplying them with their own skilled lawyers, and putting everyone in a room together to knock out a new settlement, it just isn’t going to happen," Grimmelmann observes. "The expense would be absurd, it would take months, or, more likely years to pull off, and I still can’t imagine those negotiations succeeding, especially not after the level of vehement opposition to the original settlement."

Freelance stems from the central rights dispute of the digital age—Tasini v. New York Times—the landmark case in which members of the National Writers’ Union sued publishers and electronic aggregators for taking their works without permission, a case that has had a long, and winding legal road. In 1997, Sonia Sotomayor ruled in favor of the publisher defendants. In 1999, an Appeals Court reversed Sotomayor. In 2001, the Supreme Court affirmed that reversal. Four years later, in 2005, a subsequent class action settlement was announced and was quickly approved, but Irv Muchnick, and a handful of objectors appealed. The Second Circuit heard the appeal—but ignored the objections, and instead surprised everyone by rejecting the settlement on jurisdictional grounds, saying the court could not approve payments to writers with unregistered copyrights. That put the objectors in an unusual position: asking the Supreme Court to hold up the settlement, so they could instead kill it on the merits. Last year, the Supreme Court did reverse, and sent the settlement back to be heard on the merits, where yesterday's rulling all but killed it.

Notably, the root issues in the Google and Freelance settlements, including the license by default, are almost identical, and one of the reasons why lead objector Irv Muchnick has been vocal over the years in pushing for a more "industrywide" solution to the cases that includes some kind of royalty system for creators. "For all its problems, the Google Books deal at least includes a future royalty system, which I personally consider the key missing ingredient in Freelance," he wrote last year in an editorial. "That is why I wrote last September to Attorney General Eric Holder and made the decidedly unrigorous recommendation that his office knock some heads together and try to fuse Google Books and Freelance into a truly comprehensive negotiation of all interests: librarians and information consumers, as well as publishers and a few writers’ organizations claiming to represent everyone."

Practically speaking, for the parties in Freelance and for consumers, it remains to be seen what the fallout will be from the Second Circuit‘s ruling. Will new negotiations ensue? Will this be more impetus for Congress to act? Since the 2001 Supreme Court ruling in Tasini, publishers have warned of pulling content from databases, and have forced “all-rights” contracts onto freelance writers.

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